EDITORIAL: Push needed for tax reform in Pa.

Sunday in this space we congratulated our skinflint governor for finally overcoming his campaign promise not to raise taxes on anybody or anything.

The governor has slowly come to the conclusion that the state needs more money and he has decided to pursue it through sales taxes on Internet vendors and fees on natural gas drillers. Also, uncapping the Oil Company Franchise Tax could be a mini-gusher for needed state revenues.

It can be argued that our reference to "selfish voters" and "anti-tax zealots" ignored the fact that some state governments can be pretty irresponsible and "selfish" themselves. There is a limit to what governments can and should do, and a limit to what they can demand in the way of taxes from even their wealthiest residents.

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Take California, for instance.

With super-Democratic majorities in its Legislature and a Democratic governor, California just raised its state income tax on its highest earners to a stunning 13.2 percent.

Combined with the federal government's recent tax hike on people making over $450,000, that means the effective overall tax bill on California's top earners can reach as high as 63 percent. No wonder so many high earners have already fled - or are thinking about fleeing - the Golden State.

Case in point, pro golfer Phil Mickelson. Last week he made the mistake of mentioning in a press interview that he was thinking of moving his family out of his home state because of the new tax rates. He was immediately bashed for being greedy and selfish. After all, he's a multi-multi-millionaire and he'd still have millions left to feed his family if he stayed put.

"Cry me a river, Lefty!" was the attitude conveyed by class warriors and soak-the-rich advocates.

Mickelson quickly apologized for having said what he said and vowed not to make that mistake again. What he didn't promise to do was stay in California.

The funny thing about Mickelson is that he is one of the few big-time pro golfers still left in California. Most of the others - including Tiger Woods - fled years ago.

Pro athletes aren't the only millionaires who leave high tax states for low-tax locales. But so far there are few studies that indicate that increasing taxes on the rich actually lead to mass exoduses. Many other factors certainly play into the decisions people make when it comes to relocating from one state to another. But certainly tax rates will have a greater and greater impact as those rates go up.

Pennsylvania has a relatively low, flat 3.07 percent income tax. So if you make a $1 million a year, you pay $30,700 to the state. If you make $100,000 a year you pay $3,070 and if you make $50,000 you pay $1,535 and so on.

Now, is it fair that the millionaire has a tax bill 38 times what the average Pennsylvania wage earner pays? That, of course, depends on how you want to look it.

But more and more revenue-starved states and countries are looking to increase taxes on the wealthy rather than grow their tax bases or cut government spending. And so we are seeing more and more stories about famous wealthy people leaving their home states and native lands for tax-friendlier confines.

In the U.S., states like California, New York, and Illinois have refused to pare back government spending and live within their means. The promises their legislators have made to public employee unions are unsustainable. Everyone knows it, but no one in a position of responsibility appears willing to do anything about it. Government office holders can continue to raise tax rates on their wealthier citizens, but even if they took them to 95 percent, it wouldn't be enough to sustain current levels of spending and promised future spending.

Growing the tax base plus cutting government spending is the only path to fiscal health.

California, with its sunny weather and beautiful coastline, has an appeal with which it is tough for a rust-belt state like Pennsylvania to compete. But at least we're not driving wealthier individuals out of our state with confiscatory tax rates.

Rich pro golfers aren't the only people being driven out of California. Highly-taxed and highly regulated employers are leaving, too. So are other wealthy people.

It wasn't Grover Norquist, the famous anti-tax activist, who wrote these lyrics:

"If you drive a car, I'll tax the street,

If you try to sit, I'll tax your seat.

If you get too cold I'll tax the heat,

If you take a walk, I'll tax your feet.

Don't ask me what I want it for

If you don't want to pay some more

'Cause I'm the taxman, yeah, I'm the taxman ..."

It was George Harrison, back in 1966. That's when the top rate in Great Britain was 95 percent and it was one of the main reasons The Beatles eventually fled Jolly Old England.

Like cooking a live frog, you don't throw it into a frying pan with boiling water. It'll jump out. You cook a frog by putting it in warm water and turning up the heat slowly.

The same is true for raising taxes. Raise them too high, too fast and all you end up with is a live frog jumping around your kitchen. Do it right and you end up with ... well, a dead frog.

Hmmm.

Maybe when it comes to raising taxes and fiscal health, we need to go back to the drawing board.